ZEW Research Seminar
The Effect of Monopoly Regulation on the Timing of Investment
- Prof. Dr. Gert Brunekreeft (Jacobs University Bremen; Bremen Energie Institut)
This paper contributes a theoretical analysis of the effects of regulation on the timing of monopoly investment under certainty in a setting with lumpy investment outlays. We distinguish between price-based regulation and cost-based regulation. To motivate investment, we focus on wear and tear leading to replacement investment and on demand growth resulting in expansion investment. For replacement investment, price-based regulation may work just fine, if properly applied, but it does not work well for expansion investment. Cost-based regulation accelerates investment compared to price-based regulation, but this may not always be efficient.
16:00 - 17:30 Uhr
Location of the Event
ZEW, L 7,1 D-68161 Mannheim
509_bewp01 Feb2010 Brunekreeft Borrmann.pdf